NH Investment & Securities assessed that Samsung SDI is in a more difficult situation than expected. It lowered the target price from 370,000 won to 330,000 won. However, it suggested a 'buy' investment opinion. On the 2nd, Samsung SDI's closing price was 239,500 won.

Samsung SDI Giheung headquarters./Courtesy of Samsung SDI

On the 3rd, Jumin Woo, a researcher at NH Investment & Securities, noted, “Lowering the target price is the result of reducing this year's sales growth rate for Samsung SDI from a previously anticipated 20% increase to 13%,” and added, “As it is trading at a price-to-book ratio (PBR) of 0.8 times, the possibility of further price declines is low, but the business recovery is not meaningful, so upside potential is also limited.”

Europe may have room to ease penalties on carbon dioxide emissions following a meeting of the European Union (EU) Commissioner for the automotive industry in January. This has led NH Investment & Securities to lower Samsung SDI's sales growth rate. The chief researcher explained, “While the emission allowances are expected to decrease as planned, we have lowered the growth rate assuming only penalties will be relaxed.”

The United Kingdom is already holding public hearings to ease regulations. Accordingly, NH Investment & Securities also adjusted Samsung SDI's sales to Stellantis in the U.S. The chief researcher stated, “Recently, Stellantis has postponed the launch date for the U.S. RAM 1500 electric pickup to 2026,” and added, “The expected elimination of the electric vehicle tax credit in the second half of this year will likely slow down demand.”

Weak demand and delays in customer acquisition also appear to be burdening performance, as the deficit in the small battery institutional sector is expected to persist for some time. The chief researcher projected, “Compared to competitors, the competitiveness in the mid-low price segment and large diameter round battery orders is insufficient, so short-term relative stock prices will be sluggish.”

NH Investment & Securities forecasted Samsung SDI's revenue for the last quarter of last year to be 3.9 trillion won with an operating loss of 201 billion won. The chief researcher estimated, “With fixed costs and one-time expenses factored in, profitability is presumed to have worsened,” and added, “The one-time expenses seem to have arisen in the process of reflecting improvements in small battery inventory and quality costs for automotive batteries.”